Judge says companies don’t owe Anaheim hotel taxes for rooms booked

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LOS ANGELES — A judge ruled Monday that online travel sites such as Expedia do not owe the city of Anaheim $21 million in hotel taxes for rooms booked over the Internet, the first ruling of its kind in California on an issue that has bubbled up in cities across the country.

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Such disputes are increasingly common between online travel companies and tourist-dependent cities.

Lawsuits or complaints have been filed around the country by cities or customers, including in Georgia, Maryland, Texas, New York, Illinois, Pennsylvania and in the California cities of San Diego and San Francisco.

Many of them have been dismissed at the federal or state level, but others are still pending.

The lawsuits hinge on the complicated pricing schemes used by online travel sites.

When consumers make reservations at the sites, they pay more for a room than the online outfits pay the hotels for the room, allowing the online companies to pocket the difference.

The taxes are paid on that cheaper rate. That means if a travel site buys a room from a hotel at $50 and sells it for $100, the site sends the hotel taxes for the amount it paid and not the price it charged. The companies say the exact markup rate is confidential.

Cities say they should be paid on the higher rate.

The online travel companies are hopeful the decision could influence cases pending in other municipalities, attorney Darrel Hieber said in a prepared statement.

"We are heartened by the court's decision and hope it will encourage other municipalities to work with (online travel companies) to increase tourism through cooperation, rather than wasting time and energy on frivolous litigation."